Part 8/12:

• He warns that models rooted solely in historical correlations can fail catastrophically when conditions change—such as the 2008 financial crisis—highlighting the need to understand why particular factors matter.

Building intuitive explanations for model features ensures robustness, aids in model validation, and enhances trust among decision-makers.

Harnessing Counterintuitive Insights

Most impactful insights emerge from questions that challenge existing assumptions:

• For example, a common belief was that higher debt indicated higher risk. But data revealed the contrary: customers transferring balances often transferred to lower-rate cards intending to pay off debt, thus representing lower risk.